The Caucasus region is a small and troubled place. It should be a common endeavour where its small and diverse nationalities - in Georgia, Armenia and Azerbaijan as well as Russia’s north Caucasus - work together to build an integrated region. Instead, no sense of common purpose is discernible: the sad reality is, that with its tangle of closed borders and ceasefire lines, the Caucasus more resembles a geopolitical suicide-pact.

Nowhere in the world can there be so many roadblocks. The two long borders - Armenia-Azerbaijan and Russia-Georgia are almost permanently closed (the latter even more tightly controlled since the war of August 2008 between the two countries). Only two neighbours – Azerbaijan and Georgia – can be said to have a genuinely close relationship, and even that is based primarily on energy politics rather than common values; it does not translate into many tangible benefits for ordinary people.

Thomas de Waal was Caucasus editor at the Institute for War and Peace Reporting in London from 2002-08.

He is co-author of Chechnya: calamity in the Caucasus (New York University Press, 1998) and author of Black Garden: Armenia and Azerbaijan through peace and war (New York University Press, 2003)

This article is a slightly expanded version of his last contribution to the IWPR’s Caucasus Reporting Service, which he edited for almost seven years

Also by Thomas de Waal in openDemocracy:
“The north Caucasus: politics or war?” (7 September 2004)
“Musa Shanib in the Caucasus: a political odyssey” (11 October 2005)
“Abkhazia's dream of freedom” (9 May 2006)
“Abkhazia-Georgia, Kosovo-Serbia: parallel worlds?” (1 August 2006) - an exchange with Zeyno Baran
“Abkhazia's archive: fire of war, ashes of history” (20 October 2006)
“The Russia-Georgia tinderbox” (16 May 2008)
“South Ossetia: war and politics” (10 August 2008)
“South Ossetia: the avoidable tragedy” (12 August 2008)
“Transdniestria: a family quarrel” (27 November 2008)

A tale of two markets

Yet, given the chance, the everyday folk of the Caucasus eagerly take the opportunity to do business with one another. A tale of two markets confirms this. The first was the one at Ergneti, right on the administrative border between Georgia and the breakaway territory of South Ossetia, where the busiest wholesale market in the Caucasus used to flourish. The Ossetians brought untaxed goods from Russia (everything from cigarettes to cars) to sell there, in return for (mainly) agricultural produce brought by the Georgians. The Georgian government of Mikheil Saakashvili that came to power in January 2004 argued that since Ergneti was unregulated it was knocking a big hole in the state budget and had to be shut down; the market was duly closed in June 2004.

The closure of Ergneti may have been justified on strict legal grounds, but the decision lacked imagination; for, in the words of Georgia’s former conflict- resolution minister Giorgy Khaindrava, “If Ergneti didn’t exist it would have to be invented.” Ergneti was possibly the widest “confidence-building measure” in the entire Caucasus region, with people of all nationalities doing business. It is arguable that the day it closed was the day the countdown to war in South Ossetia began.

The second market was located at the Georgian village of Sadakhlo on the Georgia-Armenia border. It was another astonishing spectacle: a mass Armenian-Azerbaijani market on Georgian territory, which paid no heed to the bitter relations at state level between the two countries and which moreover was conducted with virtually no Georgians in sight. There, Azerbaijanis bought Armenian produce and Armenians purchased Azerbaijani goods that would then flood the shops of Yerevan. Sadakhlo, though not forced to shut down entirely as Ergneti was, has been curtailed by governmental pressures. Again, a magnificent example of inter-ethnic cooperation has been suppressed.

A tale of bad politics

What politics drives apart, common economic and security interests should drive together. The south Caucasus is a delicate mechanism in which the malfunctioning of one part affects what is going in the others.

That became obvious during the August 2008 war in Georgia. Azerbaijan’s prime revenue-earners, the Baku-Tbilisi-Ceyhan and Baku-Supsa pipelines, were shut down. When the Grakali railway bridge in central Georgia was blown up on 16 August, the effect was also to block the only railway-line linking Armenia to the Black Sea coast. The result was to cut off landlocked Armenia’s entire imports for a week, costing the country at least $500 million in revenue.

The political responsibility for this unfortunate state of affairs is widely shared.

Armenia and Azerbaijan have adopted intransigent positions which mean they have failed to resolve the prime source of tension between them as well as the biggest obstacle to peace and prosperity in the Caucasus: the Nagorno-Karabakh conflict. Georgia, in its push towards Euro-Atlantic integration since 2004, has generally ignored its neighbours and Russia. In the words of Georgian analyst Archil Gegeshidze, one reason for Georgia’s problems is that the Saakashvili government unwisely “put all its eggs in the basket of mobilising western support” and did not pay sufficient attention to its neighbours.

Europeans and Americans have often payed lip-service to the idea of regional integration in the Caucasus, though in practice they have generally pursued narrower goals. Europe’s grand communication and transport project designed to link the Caucasus to Europe - Traseca, billed as a new “silk road” - has received less than €200 million ($270 million) of investment since it was inaugurated in 1993; its effects so far are negligible.

Instead, projects such as Nato expansion, energy security and the claims of Armenian diasporas have all tended to divide Caucasian policy into different segments. In Washington, it seems at times that different agencies are running different policies with a different primary focus - the Congress on Armenia, the Pentagon on Azerbaijan, and the state department on Georgia.

Moreover, several Washington strategists have suggested that Russia could be “contained” in the Caucasus, overlooking the fact that the region has figured in Russian minds and plans for two centuries and that much of the Russian elite has family or childhood ties to places that westerners barely know.

For good or ill, Russia still has a special role in the Caucasus. Its own policies have done it no favours. Russia continues to see the region in colonial terms, seeking to intimidate or control resources rather than use the soft power of trade or – its biggest asset in the region, if a diminishing one – the Russian language, to help form a new and friendly neighbourhood.

Among openDemocracy’s many articles on the Caucasus region:

Alexander Rondeli, “Georgia: a rough road from the rose revolution” (4 December 2003)

Sabine Freizer, “Dynasty and democracy in Azerbaijan” (5 December 2003)

Nino Nanava, “Mikheil Saakashvili: new romantic or modern realist?” (11 December 2003)

Neal Ascherson, “Tbilisi, Georgia: the rose revolution's rocky road” (15 July 2005)

Chris Smith, “Baku-Ceyhan: the geopolitics of oil” (16 August 2005)

Donald Rayfield, “Georgia and Russia: with you, without you” (3 October 2006)

Susan Richards, “Georgia’s Byzantine politics” (3 November 2005)

Robert Parsons, “Russia and Georgia: a lover's revenge” (6 October 2006)

George Hewitt, “Abkhazia: land in limbo” (10 October 2006)

Sabine Freizer, “Nagorno-Karabakh: between vote and reality” (14 December 2006)

Vicken Cheterian, “Georgia’s arms race” (4 July 2007)

Donald Rayfield, “Russia vs Georgia: a war of perceptions” (24 August 2007)

Mary Kaldor, “The Balkans-Caucasus tangle: states and citizens” (9 January 2008)

Armine Ishkanian, "Democracy contested: Armenia's fifth presidential elections" (4 March 2008)

Robert Parsons, “Georgia, Abkhazia, Russia: the war option” (13 May 2008)

Alexander Rondeli, “Georgia’s search for itself” (8 July 2008)

Donald Rayfield, “The Georgia-Russia conflict: lost territory, found nation” (13 August 2008)

Neal Ascherson, “After the war: recognising reality in Abkhazia and Georgia” (15 August 2008)

Ivan Krastev, “Russia and the Georgia war: the great-power trap” (19 August 2008)

Ghia Nodia, “Russian war and Georgian democracy” (22 August 2008)

Vicken Cheterian, “Georgia’s forgotten legacy” (3 September 2008)

Fred Halliday, “Armenia’s mixed messages” (15 October 2008)

Robert Parsons, “Georgia: the politics of recovery” (24 October 2008)

Plus: openDemocracy's Russia section reports, debates and blogs the Georgia war.

People-to-people ties are still in place, often despite (as Ergneti and Sadakhlo show) the best efforts of governments. Russians and Georgians are tied together by innumerable ties of history, culture and business (see Donald Rayfield, “Georgia and Russia: with you, without you”, 3 October 2006). Hundreds of thousands of Georgians continue to work in Russia, despite the August conflict. “(Russian and Georgian) leaders have tried to wreck a good relationship between two peoples”, says Georgian analyst Ivlian Khaindrava.

This was understood by Mikheil Saakashvili’s predecessor as Georgian president, Eduard Shevardnadze, who returned to Georgia after serving as Soviet foreign minister in the perestroika years of the late 1980s. During his term in office in Tbilisi, Shevardnadze was frequently unable to appease the harder-line elements of the Russian elite; though in a December 2008 interview with the Institute for War and Peace Reporting (IWPR) he rebuked his successor by saying that he had always paid the Russians maximum respect. Shevardnadze cited the decision in 2002 to invite American troops to Georgia as part of the groundbreaking “train and equip” programme, when he had been careful to inform President Vladimir Putin in advance. Putin went on the record as saying that a United States troop presence was “no tragedy” for Russia.

“I always tried to emphasise that Russia for us is not a secondary country, that it is a great neighbour with big military and economic potential”, said Shevardnadze.

A rooted tendency of conflict - something in evidence too in the war of 2008-09 in Gaza - is that it gives birth to polarised and zero-sum thinking, the view that if your opponent is suffering that is a good thing. In the case of the crisis of relations between Georgia and Russia, says Ivlian Khaindrava, “many in Georgia are just keeping quiet and waiting for the situation in Russia to deteriorate, the oil price to go down, tensions in the north Caucasus to escalate.”

That approach, he believes, could be a disaster for Georgia. For an economic downturn in Russia will hurt Georgian migrants there and the families back home they send remittances to, while new violence in the north Caucasus could spill over into Georgia.

A tale of the future

This kind of zero-sum thinking is most acute in the region between Armenians and Azerbaijanis, many of whom seem content to see their respective country suffer so long as the other side in the Nagorno-Karabakh conflict is feeling pain too.

It is hard for locals to transcend these divisions, even more so at a time of economic pressure and downturn when resources become scarcer and livelihoods more fragile. It is up to outsiders to offer a sense of a big picture and a broad vision of how the Caucasus could begin to function more harmoniously - as a political and economic entity rather than merely a dysfunctional geographical region.

At the beginning of 2009, it seems likely that only one big international organisation – the European Union – has the transformative power to treat these countries as a single region and promise them benefits that make it worthwhile for them to overcome the divisions and obstacles that hold them and their neighbours back. The experience of the Balkans since the wars of the 1990s provides good proof of this.

At the same time, the current signs are that the EU is still too distant and too inward-looking to care sufficiently about the Caucasus. A positive development is that European monitors are now on the ground in Georgia - though the fact that they are there because of war is a tragic reminder of the region’s dangers. It must be hoped that they become the advance-guard of a much broader engagement – not just confirmation for Europeans that this beautiful mountainous region is a permanent headache that can never be cured.